Stagflation—inflation coupled with stagnation— has defined the Iranian economy since the implementation of US extraterritorial sanctions on the country in 2011.

The inflationary environment has become a constant feature of the economy since the end of the 1980-88 Iran-Iraq War. Since the ceasefire, there have been only two years when Iran did not experience double-digit inflation, as outlined in the graph below. 

High inflation leads to many economic ills, crucially a decline in purchasing power and a concomitant shrinking of the middle class. Studies by the Majles Research Center indicate that the purchasing power of the average Iranian family in 2020 was...